September 11, 1998   

This Date's Issues: 2364• 2365 ••

Johnson's Russia List
#2365
11 September 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Russia Lawmakers Confirm Primakov.
2. Edwin Dolan: Did Chubais Lie?
3. Michele Berdy: translation re Chubais.
4. Elena Sokova, Reflections on the Current Crisis in Russia: Notes from
the Scene.
5. Moscow Times: Leonid Bershidsky, MEDIA WATCH: Moguls Redraw Media Map.
6. Washington Post editorial: Return of the Ancien Regime
7. New York Times editorial: Musical Chairs in Moscow.
8. Jamestown Foundation Monitor: PRIMAKOV IN; KOKOSHIN OUT?I
9. Los Angeles Times: Jerry Hough, Primakov Is the Right Man at the Right
Time forPrime Minister 
10. AFP: Maslyukov: Russia's new Communist economic guru.
11. AFP: Old guard offers little new for Russian economy: analysts.
12. RFE/RL: Matt Frost and Andrey Trukhan, Russian Press Review: The
Impact Of Primakov's 
Appointment As Prime Minister.]

********

#1
Russia Lawmakers Confirm Primakov 
By Barry Renfrew
September 11, 1998

MOSCOW (AP) -- Russian lawmakers overwhelmingly approved Yevgeny Primakov
as prime minister today after he called on all political factions to unite
behind his government and tackle the country's economic crisis. 
The Duma, the lower chamber of parliament, voted 315-63 to confirm
Primakov, a Soviet-era KGB spymaster and later Russia's tough-talking
foreign minister, in a major show of support for the new government. He
called for political stability, asking party leaders to give his government
up to a year before deciding if it was succeeding or not. 
He also advocated a strong state role in rescuing the flailing economy,
though insisted that reforms would continue: ''The government should
intervene into economic affairs and regulate them.'' 
Primakov denied this would be a return to Soviet economic control,
instead comparing it to emergency measures taken by the U.S. government
during the Depression. 
''What must we do? Repeat the wild capitalism that we had until now? Or
use the experience of other countries?'' he said. 
Primakov said he did not have an economic program because he had only
been nominated the day before. 
''Reforms are necessary. The present situation cannot be overcome
without them,'' he said. 
Primakov said he wanted representatives of all political parties in his
Cabinet, but warned they should put aside party interests. 
''We need unity to come out of this very grave crisis,'' he told the
hushed chamber. ''Do not expect to continue political confrontation. 
''We need to strengthen discipline. We should stop this sloppiness which
now exists in the government,'' he said. 
On foreign policy, Primakov said there would be no confrontation with
the West, but it was vital to defend Russia's national interests. 
Earlier, President Boris Yeltsin said a major crisis had been avoided by
compromise and that Primakov had strong backing from all sides. He called
for measures to stabilize prices, restore supplies to shops and prop up the
banking system. 
''I understand that it's hard for everyone, but one cannot give in to
emotions ... we'll have to draw lessons from the current crisis and now
we'll have to work on overcoming it,'' Yeltsin said in a television address
to the nation. 
In a sign that the government wanted broad political support, Yeltsin
nominated Viktor Gerashchenko to head the Central Bank. Gerashchenko, 60,
an ex-head of the Soviet State Bank, headed the Central Bank for nearly
three years until being ousted in October 1994 after the ruble nose-dived. 

Critics blamed Geraschenko for fueling inflation with huge credits to
ailing industry and agriculture. Jeffrey Sachs, a former economic adviser
to the Kremlin, once called him ''the worst central bank governor in
history.'' 
But the Duma apparently felt differently, and quickly and strongly
confirmed Gerashchenko later in the day with a 273-65 vote. 
Another former Soviet official, Yuri Maslyukov, would likely be first
deputy prime minister for economic affairs, Duma deputies said. Maslyukov
is a technocrat who until recently was trade and industry minister. 
Opposition and pro-government political leaders had hailed Primakov's
appointment. 
''Common sense has prevailed in our state,'' Communist leader Gennady
Zyuganov said Thursday. Zyuganov spearheaded the opposition to the previous
candidate for premier, Viktor Chernomyrdin. 
Primakov, respected across the political spectrum, will need to quickly
assemble a Cabinet to deal with the most severe economic crisis since the
Soviet collapse. The ruble has plummeted, industrial production is stagnant
and the government is broke. 
Despite such deep economic problems, Primakov's nomination raised hopes
on Russia's battered markets. The price of the ruble was between 10 and 12
to the U.S. dollar -- up from 17 last Friday. 
Primakov, 68, is seen as a technocrat, non-ideological and loyal to
Yeltsin. The low-key premier appears more comfortable handling discreet
diplomatic negotiations than enduring the glare of publicity that his new
job will bring. 
As foreign minister, Primakov won praise at home for his efforts to
restore some of Russia's diminished international clout and create a
''multipolar'' world designed to counterbalance U.S. dominance. 
Primakov has cool but cordial relations with the United States. There
has been periodic friction over his desire to ease sanctions against Iraq,
maintain nuclear cooperation with Iran, and resist NATO's expansion. 
Former Soviet leader Mikhail Gorbachev picked him as one of his closest
aides during the reform period of the late 1980s. 
He entered the international spotlight at the end of 1990 when, shortly
before the Gulf War began, he made several high-profile trips to Iraq and
tried unsuccessfully to persuade Saddam Hussein to withdraw from Kuwait. 
Primakov was briefly first deputy director of the KGB, the main Soviet
security organization, in 1991. After the Soviet breakup, he served as head
of the Russian Foreign Intelligence Service until Yeltsin named him foreign
minister in 1996. 
Yeltsin settled on Primakov after parliament twice rejected
Chernomyrdin, with opposition leaders vowing to vote him down again on a
third and final vote. 
Chernomyrdin served five years as prime minister before Yeltsin fired
him last March. Many Russians blame him for the country's economic problems. 

*******

#2
Date: Fri, 11 Sep 1998 
From: "Edwin G. Dolan" <dolan@co.ru>
Subject: Did Chubais Lie?

An article in the September 10 Moscow Times, based on an interview published
in Kommersant for September 8, reports the following in part (I am unable
easily to post the full text, which is available at www.moscowtimes.ru):

"Antoly Chubais said in a published interview that Russia 'conned'
the international community out of nearly $20 billion in loans by lying
about the severity of the country's fiscal problems.
"...it was necessary and appropriate for Russia to lie in order to
obtain infusions of cash."
"...in such situations, the authorities have to do it [lie]. We
ought to. The financial institutions understand, despite the fact that we
conned them out of $20 billion, that we had no other way out."

I have not seen any reaction to this. Is anyone else upset by this, or only
me? Does anyone have the text of the original Kommersant interview? Can
anyone shed any light regarding exactly what false information might have
been supplied or what lies were told?

Edwin G. Dolan
American Institute of Business and Economics

********

#3
Date: Fri, 11 Sep 1998 
From: "Michele A. Berdy" <maberdy@glasnet.ru>
Subject: translation re Chubais

Hi, David. This is a quick note about translation. In the excerpt from
the Kommersant interview with Chubais, the mysterious Mr. or Ms. "X" (why
the anonymity?) translated "kinuli" as "conned." To me, "con" implies
premeditation or a "sting." "Kinut'" means to "stiff" someone: people owe
you money, but they don't pay it. (It can also mean to "let someone down,"
"not show up," etc.) It doesn't necessarily mean that they knew all along
they wouldn't pay or that they set you up; they might have run out of
money. (As someone who has been stiffed a number of times here, the issue
of intention was rather important to me...)

Without looking at the entire text in Russian, it's hard to say what
Chubais meant -- but judging by what's here, it doesn't sound like Chubais
is admitting the Russians conned the West, ie, had intended not to pay. To
the contrary, he says they had no alternative. "So now in international
financial institutions, despite everything we have done to them -- we
stiffed them for $20 billion -- there is an understanding that we had no
other way out."

*********

#4
Date: Fri, 11 Sep 1998
From: nsokov@miis.edu (Nikolai Sokov)
Subject: "Reflections on the Current Crisis in Russia: Notes from the Scene"

These notes from Moscow were posted yesterday at
http://cns.miis.edu/cres.html. 
This is the first installment in a series of articles.

"Reflections on the Current Crisis in Russia: Notes from the Scene"
Elena Sokova, Senior Research Associate and former librarian of the
Center for Russian and Eurasian Studies at the Monterey
Institute, recently returned to her native Russia. She prepared
these notes on the current situation there on September 10, 1998.

Any analysis of the situation in Russia is necessarily an exercise in
analyzing Russian character. Russians like to give advice, even when no
one asks for it. Russians call their country "Strana Sovetov," the country of
Soviets. Although it could refer to the former communist ruling body,
this phrase is more generally understood to mean "the country of advice."
Russians also like to pronounce judgments, which often substitute for
analysis. What you read below is one Russian's attempt to analyze and give

glimpses of what is happening in Russia, as seen from Moscow.

A crisis in any country is about three things: macroeconomic processes,
political leadership, and public attitudes. Russia is no different, but
with an important twist. Russias crisis has generated an avalanche of
speculation about its meaning and the future of the country. There are two
major scenarios. The first one, which is supported by the majority of
political
leaders and analysts, is very negative: Russia is moving towards political
and economic collapse. The second, which is less popular, is that Russia
is at a stage when an artificial market economy is transforming into a
real market economy an unavoidable adjustment, which, in Russian
tradition, is proving more painful than necessary.

I want to believe the second one. It is true that Russia's current banking
system is not functioning the way banking does in the rest of the civilized
world. It is also true that the Russian market economy is far from being a
real market. In fact, this is true for almost any aspect of political and
economic life in Russia. The current Russian democracy and economy could
be safely compared to the mock turtle in Alice in Wonderland. It
was a turtle, but not quite a real turtle.

Yet, there have been promising signs. In 1997 and early 1998, there was a
feeling of normalcy. People began to work and earn money, and
banks began to function. It is now clear that this was largely a wave of
speculation without a solid foundation beneath it. The country seemed
poised to take the next step, which could start it on the road toward
recovery. The economy had taken the first step, but crumbled before it
could take the second. The current crisis could lead to collapse, or it could
eliminate the purely speculative elements and leave the proto-market
institutions intact and poised for a new surge. The consensus opinion now
is that businesses that produce tangible goods and services, rather than
simply trade paper, can survive. These sectors include natural resources
(oil and gas in particular), food, communications, and transportation.

No one expected the latest financial crisis to be such a deep one. I guess
this is just a reflection of Russian culture. We simply cannot move
slowly and gradually. We always like the extremes. Speculation was rampant
before the crisis; no one dared to be modest and judicious. If there
is a crisis, it has to be of biblical proportions. Besides, the majority
of the population remembers the early 1990s only too well. So when
Russians hear alarm bells, we begin to panic, and there is no way we can
be stopped. Especially when no one tries to stop us.

Today, the real question is political leadership. The choice between
collapse and growth ultimately depends on one person, the new prime
minister. After the predictable defeat on September 7 of Chernomyrdin in
the Duma, the country held its breath to see who the new choice would
be. 

The field quickly narrowed down to three candidates: Chernomyrdin,
Luzhkov, and Primakov. Of these three, only Luzhkov and Primakov had
any chance of approval by the Duma. Chernomyrdin still tried hard. He

began to consolidate power and make economic decisions; the
unexpected rise in the value of the ruble is widely attributed to his
actions.

However, the only person who tried to do anything substantial in this
situation was Moscows mayor, Yuri Luzhkov. He was able to consolidate
Moscows budget money in the city banks, he promised to increase pensions,
and he allowed dollar prices to be used for imported goods to
avoid speculation on ruble swings. My estimate is that at least 90% of
Muscovites would have been happy to see him as prime minister. It is hard
to measure support around Russia as a whole, but it seems his popularity
has outgrown Moscows limits. Even the most pro-Communist people
agree that his stamina and skills are precisely what a prime minister
would need. His activities stand in marked contrast to what other regional
leaders, including Gen. Alexander Lebed, did; they simply attempted to
control prices by administrative means in good old Soviet style. Luzhkov
was the only one who shaped his emergency measures in market terms.

His problem is that the Kremlin and the Duma realize that if he succeeds
as prime minister, he is guaranteed to become president in the next
elections, probably even earlier. And there is broad belief that he can
succeed. He assumes responsibility and is not afraid to act quickly and
decisively. His rule of Moscow has yielded results, the first tangible
results in the country in the last ten years.

The current political leadership is unpopular because it doesn't act at
all. All activity is concentrated in political intrigues, not in running the
country. The ordinary people are tired of political arguments and shows.
They want to move forward, develop their businesses, build decent
housing, and ensure financial and political security for their families.
The only thing they need from the government is to introduce a fair and
clear legal system and a favorable business environment. But neither the
current president, nor the government, nor the Duma want or are able to
provide such leadership. Most believe Luzhkov is capable of providing it.

The problem is that, even as the leftist (i.e., Communist) opposition
pushes his candidacy, it also fears him. Luzhkov's success would likely
have meant political bankruptcy for both the powers that be in the Kremlin
and the left-wing opposition. Probably because Luzhkov is seen as too
powerful a rival, Yeltsin instead nominated foreign minister Yevgeni
Primakov for prime minister. The announcement of Primakovs candidacy
initially caused the ruble to fall again, not drastically yet, but still a
worrying turnaround. The big question now is who will be managing the
economy under Primakov, so the crisis is not over yet.

Here is another puzzle: the value of the ruble and panic buying. The
September 9 rise of the ruble to 13 per dollar was a big surprise for
everybody. A day before you could not buy dollars anywhere, even for 24-25
rubles. Now, as of this writing, you cannot sell dollars; exchange
offices do not have enough rubles. It cant be that the country does not
have both dollars and rubles at the same time, except that in Russia

everything is possible. 

Another thing that defies explanation is how a population that claims to
have no money can wipe out all available supplies food, TV sets,
computers in one week. The obvious explanation, that the purchases were
made by the people with money, is actually wrong. The ones with
money did not care about prices. They were not buying food; they were
buying dollars, expensive cars, and designer clothes using the brief
intermission when their dollars could suddenly buy them much more than
before. Pensioners and other people with low incomes hunted for food
and basic necessities. Thus, the price for caviar and sturgeon actually
remained the same during this period; they were out of reach for low
income persons anyway. Who was buying computers? The answer is, the middle
class or, rather, people with medium income, whose numbers
proliferated sharply after 1996. They were hunting for food as well,
filling the gap between the very rich and very poor.

But despite the panic and disappearing goods, there is unlikely to be any
serious, open protest. The population is much wiser now. They have
come to understand that the authorities are likely to use any public
protest to achieve their own political goals, not to solve the country's
economic
problems. Everybody realizes that the current economic difficulties cannot
be solved by shuffling the same deck of cards. People trust neither the
government nor the opposition. Most protests now are economic by their
nature, not political. There is no political force in Russia now that can
count on the support of the majority of the population, although the
left-wing opposition claims it has such support. If the political
confrontation
at the top ends or at least cools down, there will be no serious protests.
Perhaps some hunger strikes or local protest, but these will be protests
against the government as a whole, not against personalities or parties. 

There is a dichotomy in public opinion. Many still believe that the
government should regulate prices in their small towns and pay wages even
if their enterprise is private and the government has nothing to do with its
problems. The years of Communist rule still affect the Russian mentality.
People with low levels of education continue to rely on government to
regulate their lives. And keep praying for a good tsar. 

The emerging middle class, which became very visible in 1997, especially
in Moscow and the other big cities, has the opposite idea. The only
thing they ask for is no government involvement in their business and
personal life at all, and the absence of frequent changes or drastic swings
in business regulations. What they need is stable tax legislation and
simple and easy procedures to start and run their businesses. The middle
class is the group that most fears political instability. Unfortunately,
the financial crisis has led to the massive downsizing or closure of many
businesses, especially in finance and banking. It is the middle class that
is the real victim of the current crisis. Blue-collar workers outside big
cities and pensioners had little to lose from it; the middle class, which

began to emerge in the last few years, lost both money and, I am afraid,
the feeling of emerging security and a stable future.

Now, some advice, Russian-style. As the West develops a policy on the
Russian crisis, it has to make a choice. This is not a choice between
doing nothing and doing something. Even if you do nothing, you still
affect the situation. The West can support the first element of the public
mentioned above, those who yearn for a stronger central government
presence in the economy, by writing Russia off as a net loss. Or the West
can support the emerging middle class. I would not go as far as to suggest
what should be done, but the potential customer the middle class 
should be kept in mind.

********
#5
Moscow Times
September 11, 1998 
MEDIA WATCH: Moguls Redraw Media Map 
By Leonid Bershidsky
Special to The Moscow Times

It seems only yesterday that it was so easy to analyze the Russian media:
you
knew to whom a television station or newspaper belonged and you easily found
where the owner's stand jibed with the media outlet's editorial policy. 
For example, in the bankers' war that lasted approximately until the end of
last spring, tycoons Boris Berezovsky and Vladimir Gusinsky were attacking
tycoon Vladimir Potanin. ORT and NTV television companies and such newspapers
as Nezavisimaya Gazeta, Noviye Izvestia and Segodnya were on the offensive,
while RTR television, rumored to be tied to Potanin by common interests, and
the newspapers Izvestia, Komsomolskaya Pravda and Russky Telegraf were on the
defensive. 
Easy? Yes, and mostly true. Or take the onslaught unleashed on Kiriyenko by
some oligarchs, including natural gas monopolist Rem Vyakhirev. That one was
easy and obvious, too. 
Few things are that self-evident in these days of confusion. Even the
issue of
ownership is muddled. For example, with Potanin's Uneximbank swallowing up
Gusinsky's MOST-Bank, it is unclear whether Gusinsky has ceded his editorial
control to Potanin, or whether these two magnates now see eye-to-eye on
politics, having found some kind of compromise. It is also possible that
Gusinsky has retained full sovereignty over his media empire as one of the
conditions of the merger. 
That is somewhat hard to divine from the editorial policies of the media
controlled by the new banking conglomerate, but I would opt for the compromise
idea. 
During the recent period of frantic consultations on the choice of Russia's
next prime minister, NTV was the only channel that got to interview Moscow
Mayor Yury Luzhkov, one of the front-runners for the top government job. The
announcer made it sound as though the NTV crew accidentally stumbled upon
Luzhkov or fought hard for access to him, but neither would have been possible
with a politician whose press aides tightly control journalists' ability to
interview him. In fact, NTV has been noted to give an unusual amount of
attention to the mayor, showing that Gusinsky has made up with him after a
spat in 1996 and 1997. 
At the same time, NTV is not seen pushing the political agenda backed
by Berezovsky, as it did during the bankers' war. That agenda, in recent
weeks,

was to push Viktor Chernomyrdin's candidacy for prime minister and at the
same
time build up Alexander Lebed's presidential ambitions. Of course, Berezovsky
is not criticized on NTV, either -- that would have been too sharp a
turnabout. Meanwhile, Potanin's Izvestia and Russky Telegraf continue to bash
Berezovsky as they did throughout the bankers' war. But criticism of Luzhkov
is not to be found in these papers. Some sort of deal between Gusinsky and
Potanin suggests itself as a good explanation for those who believe that
Russian media are puppets whose strings are pulled by the oligarchs. 
Berezovsky, on the other hand, is going it alone. He installed Sergei
Dorenko
as anchor of ORT's main news program, Vremya, over the head of former ORT
chief Ksenia Ponomaryova, who quit immediately after the appointment. Dorenko
immediately began building up Lebed, inviting him to appear live on the air
several times a week. 
The oligarchs have kept the propaganda arms of their empires even as the
empires themselves crumbled or lost book value. Political influence is still
the hottest, most important commodity to be had in Russia: You have to have it
if you want to make any money, be it in oil export or high-volume car sales. 
But the question now is whether the post-1996 oligarchs are the same people
who are going to make all the money in the new, crisis-gnawed Russia, and
especially after the crisis, if it ever ends. The old tycoons may use their
remaining media holdings to jockey for influence, but forces that are
currently in play are stronger than television. The media weapons that worked

in a more stable country may now be less effective. 
Right now, however, the media are practically all the oligarchs have left.
They will try to keep unprofitable media holdings afloat even if it means
saving on yachts and villas abroad. But the number of PR causes for which
these media need to be used has increased dramatically, and the tycoons
themselves cannot be sure what to do now. The clear editorial lines of
yesterday are liable to disappear, and what remains is much harder to subject
to facile analysis. 

********

#6
Washington Post
September 11, 1998
Editorial
Return of the Ancien Regime

ONCE AGAIN Russia will have a government to make any Politburo proud.
President Boris Yeltsin has nominated as prime minister Yevgeny Primakov,
68, KGB veteran and friend of dictators everywhere. If confirmed by
Russia's parliament today, Mr. Primakov's chief deputy for economic affairs
is expected to be a former head of the Soviet central planning agency. And
the new team's Central Bank chief will reportedly be Viktor Gerashchenko,
who held the same post in Soviet times and then helped undermine reform in
the new Russia by pumping credits to money-losing enterprises, thereby
fueling hyperinflation.
In one sense, this Soviet Restoration is a testament to Russian
democracy. Mr. Yeltsin, often criticized for his inability to compromise,
this time flinched when the Duma, or lower house, twice rejected his first
nominee as prime minister. A third defeat would at best have led to new
elections at a time of economic crisis; at worst, the Duma would have
refused to go home and piled a political crisis atop the economic one. So
Mr. Yeltsin's nomination of a compromise candidate favored by centrists and
Communists alike represents a step away from confrontation.
But it is far less clear that Mr. Primakov and his new team can pull
Russia out of its economic nosedive. He said yesterday that he favors
"reform." But his past statements, his new team and the Communist support
he will rely on suggest a version of reform likely to include a
money-printing binge that would reignite inflation, along with much talk
about supporting industry and living without foreign investment. Supporting
industry is fine in theory, but difficult for a bankrupt government. Russia
will not climb out of bankruptcy without embracing many of the reforms it
has thus far resisted -- such as allowing the buying and selling of land,
bolstering the rule of law and ensuring shareholder rights. 

Mr. Primakov is an intelligent and capable man who will take over with
little economic record. Perhaps he will use his mandate to promote true
reform. If not, the outlook calls for continued decline under a weak
coalition government, followed by popular revulsion against both young
reformers and old apparatchiks. The alternatives waiting in the wings are,
in many cases, frightening.

*******

#7
New York Times
September 11, 1998
Editorial
Musical Chairs in Moscow

If urbanity, longevity and familiarity with international issues were
the qualities most needed for Russia's next prime minister, Yevgeny
Primakov would be admirably suited for the job. Few officials are as well
versed in Kremlin politics as Mr. Primakov, who has served in senior
national security posts under every Russian leader going back to Leonid
Brezhnev two decades ago. But since a commitment to democracy and reform
are more essential for Russia's future, his selection yesterday by
President Boris Yeltsin looks more like an act of desperation than an act
of leadership. 
The choice of Mr. Primakov was dictated by parliamentary opposition to
Mr. Yeltsin's first choice, Viktor Chernomyrdin, no paragon of reform in a
previous tour as Prime Minister. Rather than challenging a truculent
legislature and calling new elections, which would have prolonged the
political crisis in Moscow, Mr. Yeltsin turned to a man who was acceptable
to the Communist-dominated body. Mr. Primakov earned that trust through
years of loyal party service during the Soviet period and close ties to the
K.G.B. After the Soviet Union collapsed he ran the foreign intelligence
agency that replaced the K.G.B. and since 1996 has been Foreign Minister. 
Mr. Primakov is no ideologue, as his smooth transition from one leader
and era to the next would suggest. He can be charming, wryly amusing and
cold-bloodedly pragmatic. But Russians should not look to him for new
reform programs. Instead, he is likely to assemble a coalition government
and try to steady the economy through the kind of state intervention that
over time crippled the Soviet Union. The question is whether Mr. Primakov
will do so cautiously and within the framework of a market system, or try
to wrench Russia back toward a managed economy, which would stunt the
prospects for recovery. 
Mr. Primakov may also harden Russian foreign policy in areas like the
Balkans and the Middle East, where he has already opposed American
positions as Foreign Minister. His reputation as a defender of Russian
interests has served him well in a nation soured on capitalism and
increasingly wary of Washington's policy prescriptions. 
Mr. Primakov should bring a measure of stability to a country verging on
anarchy. He at least commands the respect of many of his fellow politicians
and countrymen, which is more than can be said of Mr. Yeltsin. His other
attraction to the political heavyweights hoping to succeed Mr. Yeltsin is
that Mr. Primakov, who is 68, seems to have no interest in running for
president himself. Such are the calculations that pass for leadership in
Moscow these days. 


*******

#8
Jamestown Foundation Monitor
September 11, 1998

PRIMAKOV IN; KOKOSHIN OUT? In a move presumably tied to Primakov's
nomination as prime minister, Andrei Kokoshin yesterday was dismissed from
his post as secretary of Russia's powerful Security Council. (Russian
agencies, September 10) Unless he reemerges in a similarly authoritative
post elsewhere, Kokoshin's removal would seem to continue the game of
musical chairs atop the Russian defense establishment. Kokoshin was named
Security Council secretary in March of this year. The appointment appeared
at that time to be the culmination of a broad shakeup in the Russian defense
establishment that saw several agencies dealing with military affairs folded
into a greatly strengthened Security Council. Indeed, Kokoshin appeared to
have emerged as the most powerful figure in the Russian defense
establishment, with considerable oversight responsibilities both in the
implementation of military reform and in a broader Kremlin-backed effort to
rein in the country's numerous security and paramilitary structures. He
appeared also to be a key moving force in parallel efforts to draft several
major defense and security related policy documents.

Although it is too early to say, Kokoshin's dismissal may represent a
setback for plans to streamline and restructure Russia's army and security
organs--the so-called "power ministries." Those reform efforts generated
intense opposition not only in the bureaucracies they affected directly, but
in some cases also among Russian President Boris Yeltsin's political
opponents in parliament and elsewhere. Kokoshin, moreover, may also in
recent months have been seeking a greater say in Russian foreign policy
formation as a whole. Following a trip to Israel in August of this year, for
example, Kokoshin intimated in a Russian television interview that Moscow
should consider a more balanced approach--one that would put greater
emphasis on good relations with Israel--in its Middle Eastern policy. His
remarks on that score, which included a condemnation of what he suggested
was the Soviet Union's excessively pro-Arab position, implied criticism of
Primakov and the Middle Eastern policies that the prime minister-designate
represents. (NTV, August 12)

********

#9
Los Angeles Times
September 11, 1998 
[for personal use only]
Primakov Is the Right Man at the Right Time for Prime Minister 
Russia: Charges of anti-Americanism are unfounded and his lack of economic
experience is not necessarily a bar. 
By JERRY HOUGH
Jerry Hough Is a Professor of Political Science at Duke University and a
Senior Fellow at the Brookings Institution

In the midst of a terrible economic crisis, Russia has designated as
prime minister Foreign Minister Yevgeny M. Primakov, a man without economic
or domestic administrative experience. He has a long connection with the
KGB and is known in the West as anti-American. Yet his appointment offers
the first hope in years for real economic reform and good long-term
Russian-American relations. 
In the 1960s, Primakov was a journalist in the Middle East who was
involved with the KGB, but in its intelligence-gathering rather than its
secret police side. He later moved into administrative work in the Academy
of Sciences research institutes. 
Primakov remained, however, an important covert negotiator in Middle
East foreign relations. In 1982, during the Brezhnev period, I spent two
months at the Institute of Oriental Studies in the Soviet Union, where he
was director. I was working on the subject of American-Middle East
relations, but did not meet him until the end. He had spent the entire two
months traveling in the Middle East, primarily trying to resolve a major
conflict in the Palestine Liberation Organization. 

Primakov was typical of his generation in his pride in the Soviet
Union's status as a superpower, and he is determined that Russia be treated
as a major power whose interests are respected. He surely will work for
closer integration of Russia with the republics of the former Soviet Union.
He will be very sensitive about Western policy toward oil in the Caspian
Sea, the area from which he came. 
Primakov has been wrongly considered anti-American, largely because he flew
to Iraq during the Kuwait crisis in 1990 and tried to broker a deal that
would stop the American invasion. However, Mikhail Gorbachev is frank in
his memoirs that he himself opposed the American invasion and was sending
Primakov as his agent. 
The clearest sign of Primakov's pro-Western orientation came in 1985,
when Gorbachev selected Eduard A. Shevardnadze to replace Andrei A. Gromyko
as foreign minister. Primakov was a friend of Shevardnadze and was named
director of the top Soviet foreign policy institute. Shevardnadze did not
want to rely on Gromyko's conservative Ministry of Foreign Affairs for
information and advice. He trusted and relied on Primakov for this purpose. 
The real question about Primakov today is his ability to solve the
economic problems. Many people are negative because he has no economic
experience. Yet, while virtually everyone praises Alan Greenspan as
chairman of the Federal Reserve Board and Robert Rubin as Secretary of
Treasury, no one thinks either should be president. The skills required of
a president are different from those of a good Treasury secretary. The same
is true of a premier in Russia. 
Primakov was a Politburo member under Gorbachev and was one of the few
such officials to be accepted by Yeltsin. This alone testifies to what is
an extraordinary ability to charm people, to work with those hostile to one
another and to get them to work together. 
This is indispensable. However, Primakov will have to show that he is
capable of more than diplomatic reconciliation. He will have to make hard
decisions that offend some people, change policy, but still get Yeltsin's
support. It will not be easy. 
For years Primakov has favored the Japanese economic model. His longtime
deputy and close friend specializing on the Third World has been the
director of the Center on Japan and now has been named top official in the
Academy of Sciences supervising the international-oriented institutes.
Primakov's old friends such as Georgy Arbatov, former director of the
Institute of the U.S.A. and Canada, have been calling for a drastic change
in economic policy. 
The danger with Primakov is precisely that he and his friends are too
pro-Western, too academic and too democratic. The fear is that they will
continue to think too much in monetary terms, that they will remain focused
on privatization and that they will try to institute the Japanese model
immediately rather than the drastic emergency steps that are necessary today. 
Russia is in extreme crisis. It needs to look at the West when it was
in extreme crisis. In 1941, when war broke out, the United States
instituted price controls, rationing of key items and an industrial policy
that emphasized investment to produce specific goods, while retaining a
capitalist economy. The policy produced distortions, but also enormous
growth. 
Russia needs that kind of growth, and it needs the American model of
World War II. It can gradually move to the Japanese model and work out the
distortions that will be introduced the next five years. 

Yevgeny Primakov is an honorable man, a nationalist in the good sense
of the word. We must be understanding and helpful, even when he does things
we do not approve. If he fails, the alternatives are stark. Our security
interests must be more important than our ideological ones. 

*******

#10
Maslyukov: Russia's new Communist economic guru

MOSCOW, Sept 11 (AFP) - Yury Maslyukov, named Friday as a key component in
Yevgeny Primakov's plans, is a former Soviet-era economic planner who hails
from the ranks of the Communist Party so opposed to market reforms underway
in Russia.
But Maslyukov, whom Primakov named Friday as his prospective first
deputy prime minister, is no hardliner, declaring his support for a market
economy, albeit one in which monetarist tactics have no part.
The Communist, moreover, already held the post of trade and industry
minister in the former government of radical young reformer Sergei
Kiriyenko. Despite the humiliation of that administration in ruble
devaluation and debt default, Maslyukov's hand has since strengthened
considerably.
The former head of the Soviet economic planning agency Gosplan,
Maslyukov has nailed his colours to the mast of partial renationalisation,
protectionism and greater support for natural monopolies.
"I have known him a long time," Primakov said, as he proposed the
Communist to lawmakers on Friday. "I know him as a decent, honest and
complete professional."
Maslyukov, 60, who had been advanced by his fellow communists as a
candidate for the premiership, is considered as one of the best-connected
industrial specialists in the country.
After working his way up the ranks at the Izhevsk military factory in
Russia's central Udmurtia region, Maslyukov graduated to become the Soviet
Union's de facto military industrial chief in 1974 when he was appointed
head of the technical department of the Soviet military industry ministry.
He kept the role while moving on through the political ranks to take the
Gosplan job and a deputy premier in the Soviet council of ministers by 1988.
He achieved the ultimate ambition of every Soviet apparatchik when he
was named to the Politburo in the same year, where he fiercely opposed the
perestroika policies of then Soviet secretary general Mikhail Gorbachev.
After the fall of the Soviet Union, Maslyukov maintained his loyalty to
the communist ideal, winning a seat in parliament in 1995, and becoming a
key member of the parliamentary group by dint of his "demanding,
responsible and convincing" manner, according to one former colleague.
He risked alienating his party by voting for Kiriyenko back in April,
but was once again locking horns with the reformers by the time the young
reformist government was putting forward its economy crisis plan in July.
As head of the parliamentary commission on economic affairs, Maslyukov
slammed the government's abdication of economic responsibility and called
for a greater role of the state in economic management.
Maslyukov was born in Leninabad, Tajikistan, in September 1937, and
studied at the mechanical institute in what was then Leningrad. He joined
the Communist Party of the Soviet Union in 1966.
Maslyukov is married with a son.

*******

#11
Old guard offers little new for Russian economy: analysts

MOSCOW, Sept 11 (AFP) - The old guard which took over Russia's government
on Friday promised to print money but battle inflation, pursue reform but
boost state control over the economy, leaving analysts and markets
distinctly unimpressed.
Prime Minister Yevgeny Primakov, approved easily by parliament in a
Friday vote, told lawmakers that the country could not give up on reform
now, but needed to put the accent on industrial policy and production.
Designating two former Soviet-era apparatchiks to hone his economic and
monetary policy, Primakov said the state had to resume its old role of
intervening in the economy to revitalise production.
"We must carry out reform," Primakov told lawmakers in the State Duma
lower house of parliament. "Only with the continuation of reform do we have
a way out of this current situation. (But) We need an industrial policy.
The state must intervene in many aspects of the economy."
As his right-hand man in the government, Primakov picked Yury Maslyukov,
a Soviet-era economic planner and a Communist who has already nailed his
colours to the mast of partial renationalisation and greater support for
industry.
As his central banker, Primakov opted for Viktor Gerashchenko, who
presided over the frantic money-printing in 1993 which fuelled
hyperinflation, and who immediately spoke out in favour of "controlled"
money-printing.
"We cannot avoid a certain monetary emission, of course controlled,"
Gerashchenko told lawmakers. "But I will not distribute money left and right."
He added that he intended to defend the ruble, protect savings
threatened by a generalised banking collapse, and aid the troubled banking
sector."
In this he echoed President Boris Yeltsin, who earlier Friday called for
his new team to save the banking sector and guarantee depositor savings.
But the Kremlin chief also called for prices to be brought down quickly
and sharply, a move which analysts said would be hard to marry with
reflationary intentions.
Previous money-printing pledges by the interim government sent the ruble
plummeting earlier this week to below 20 to the dollar, though the currency
had recovered by Friday night to a central bank official rate of 11.43.
The ruble's decline has fuelled rampant inflation, prices rising by 35
percent in the first week in September alone.
"If under Gerashchenko, the central bank chooses the option of easing
money policies it will be a disaster for Russia," said David Riley, eastern
Europe analyst with the Fitch IBCA ratings agency in London.
"It will come through in further weakness of the ruble as well as
providing an extra twist to the inflationary spiral, ... and pose dangers
for foreign debt servicing," Riley said.
Those dangers became abundantly clear on Friday as the finance ministry
admitted that Russia paid only a fraction of the interest it owed Paris
Club creditors in August.
Russia's defaulted on its domestic debt last month as it announced a de
facto ruble devaluation. Primakov faces economic chaos as a result, with
banks teetering on the edge of collapse, savers clamouring to withdraw
their money, and ordinary citizens hoarding goods in a throwback to the
Soviet era.
"The shelves grew empty, the words 'queue' and 'shortage' re-entered our
language," Yeltsin said Friday. "A stable ruble, of which we were so proud
started falling."

Russia's wretched stock market closed before Primakov and Gerashchenko
were confirmed late Friday, but investors had ample time to register their
disapproval of the central banker's plans.
"It's a horrendously bad signal about the direction in which Primakov
wants to lead the country," said David Kuenzi, director of sales for
Creditanstalt Investment Bank's Moscow office. "To print money is going to
be disastrous for Russia. If you print money you have inflation."
"They spent all of 1993 and 1994 trying to get him out of the central
bank," added Gary Kinsey, a broker with Brunswick Warburg securities, as
the Russian Trading System (RTS) index closed down 3.5 percent at 62.31,
just off all-time lows.

*******

#12
Russian Press Review: The Impact Of Primakov's Appointment As Prime Minister
By Matt Frost and Andrey Trukhan

Prague/Moscow, 11 September 1998 (RFE/RL) - The Russian press speculates on
the ramifications of Yevgeny Primakov's appointment as prime minister.

Moscow Times: Primakov is not an economic expert
"Primakov commands general respect, but no great economic experience,"
says the Moscow based English-language newspaper The Moscow Times.
"Primakov himself is not an economic expert, but he will have to follow the
advice of economists. Who will they be? The best choice would be experts
from the Yabloko movement," opines The Moscow Times.

Vremya MN: No anti-government protests planned for October 7 
"He's irresistible. Yevgeny Primakov is agreeable in all respects."--
runs the headline in Vremya MN. "The Russian Communist party is certain
that the Yuri Masluikov will determine the economic policies of the new
cabinet." The newspaper's sources in the Communist Party are already saying
that the nationwide protest planned for October 7 will not contain any
anti-government protests. Vremya MN notes however that anti-Presidential
slogans are still being planned.

Kommersant-Daily: The presidential administration is split into two camps
Kommersant-Daily asserts that Evgeny Primakov, from the economic point
of view, is just a "screen....The important thing is what appears behind
the screen. The Russian economy faces two paths: either the anti-crisis
program of Boris Fyodorov, tying the ruble to gold reserves; or Yury
Maslyukov's program of nationalization and the reemergence of State
Planning," writes Kommersant Daily. 
In another article, the newspaper writes that the situation surrounding
the appointment of a new prime minister has split the presidential
administration into two camps. One group including Tatyana Dychenko {The
President's Daughter] Valentin Yumashev, and Boris Berezovsky, supported
Chernomyrdin. The other group containing Andrey Kokoshin, Sergei
Yastrezhembsky and Yevgeny Savostyanov were against Chernomyrdin. The
president opted for disbanding the Duma and he thus insisted on nomination
Chernomyrdin's nomination for the third time. The President's determination
frightened even his closest circle. Everyone felt that Yeltsin was almost
ready to go as far as resorting to tanks. When "the family" realized that
the disbanding of the duma could lead to civil war, it rejected
Chernomyrdin and replaced him with Primakov, writes Kommersant Daily


Izvestiya: There is no reason to expect a swift exit from crisis
"A Diplomatic Move By President Yeltsin", runs the headline in
Izvestiya. The newspaper says: the communists are celebrating--for the
first time in ten years they have forced Boris Yeltsin to back down. There
is no doubt that they will try to continue the leftward leaning of the ship
of state. Primakov will be obliged to form a cabinet with one eye on the
Duma, For this reason, there is no reason to expect a swift exit from the
present crisis, writes Izvestiya. 

Russky Telegraf: Primakov developing a delayed version of reform 
"The political crisis has been postponed," writes Russky Telegraf. If
the new government opts for measures designed to bring about the financial
health necessary for the country's survival, then it will encounter stiff
opposition from the Duma, and the eternal Duma question will remain
unresolved. 
"So far, it seems that Primakov has been charged with developing exactly
this delayed version of reform--first to print the necessary money to pay
back wages and then, after a few months, to switch to a policy of strict
economic controls. It seems as if Yeltsin is banking that Primakov and his
quasi-communist government can ensure that the country survive the waves of
social unrest this autumn," writes Russky Telegraf. 

******